The citric acid only affects some people, and although it may make ketosis harder, you would still be losing weight, as it's the calorie count that matters for the weight loss. However, most people have the benefit, if they get into ketosis that the hunger cravings are much less.
But drinking water is definitely better than not drinking any; but may well be worth investigating some of the other vlcd water flavourings that you can get, or some of the non citric acid ones.